Inspired by Ben Horowitz’ excellent “Good product managers, bad product managers” post and Stefan Smalla’s “Good leader, bad leader” masterpiece I’ve attempted to put together my thoughts on what I believe makes a great venture capital investor. Thanks go to my co-workers at Point Nine Capital for his or her invaluable feedback, in particular Michael, Rodrigo and Mathias, who reviewed an early on draft of the post and provided lots of great remarks. This post symbolizes our current thinking, which might progress our time, and some parts are work in progress still. Feedback and conversation with other business owners and VCs is very pleasant.
A good VC is designed for her stock portfolio companies almost 24/7. If a profile founder needs her, she shall do everything she can – roll-up her sleeves, use her interpersonal capital, get on a airplane – to help. An excellent VC is a recruiter sometimes, sometimes a beta tester, a personal mentor sometimes, and isn’t scared to getting her hands dirty. Screw scalability. If a profile creator needs your help in putting out fires, the very last thing she or he cares about is how this scales from a VC business design perspective.
A good VC doesn’t only respond to demands from the founders. An excellent VC knows the current problems of her profile companies and it is proactively looking for solutions on a regular basis. Good VCs create firms where stock portfolio founders have equivalent access to all partners and not just to “their” partner. Knowing that there are limitations to the assistance she can offer to founders herself, a good VC attempts to leverage the knowledge and understanding of other people.
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- 22 – Evercore Partners
- 2009 8 7.52% 2.70% 4.82%
- Simple customized look-through approach
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- ► November 2007 (4)
- SembCorp Industries
- 2008 – $250,000
In particular, she facilitates knowledge exchange between the founders of her portfolio through various discussion boards, online and offline. A negative VC overpromises in the deal-making under-delivers and stage once the deal is performed. “We view ourselves as a services firm. Every day We make an effort to earn our reputation and brand.
A good VC appreciates that there surely is a huge information difference between founders and VCs with regards to the founder’s business. He realizes that the creator has thousands of hours of experience in his industry and with his customers and intimately understands people on his team, whereas the VC’s knowledge of the startup is often much more superficial.
A good VC understands that managing investors can be time-consuming for founders and tries to find the right balance between being close and providing value on the main one hand and getting out of just how on the other hand. A negative VC overestimates his insights, attempts to micro-manage, tries to exercise control and becomes a maintenance burden for the founders.
A good VC doesn’t spend money on two or more companies that are straight competing against each other. A bad VC, instead of going all-in into one company and giving his undivided attention and support to her collection company, tries to hedge her wagers by investing in several companies in the same space.
A good VC tries to maximize how big is the cake vs. If a ongoing company desires to bring about table other traders, whether in the same around where the VC invests in the ongoing company or at a later stage, a good VC helps the founders to attract great co-investors.